Chancellor hints at infrastructure spending stimulus

The chancellor of the exchequer has alluded to pubic infrastructure projects to boost the economy in the wake of the Brexit vote.

Appearing before the House of Lords Economic Affairs Committee, Philip Hammond was quizzed on the government's fiscal response to the referendum and the place of infrastructure spending in budgetary policy.

Hammond said if he was to introduce fiscal stimulus plans, he would prioritise smaller infrastructure projects that “deliver on short-term demand stimulus” over big strategic projects like HS2.

He also announced the date of the autumn statement, the first since the referendum and his first as chancellor, as 23 November. “The Treasury will be in a position to deliver a fiscal response if appropriate on the 23 November,” he said.

He told the committee if there were a need for fiscal stimulus through infrastructure projects, it would have to be “well-designed”.

“It has to be limited in duration, it has to be quick in delivering effect and, given our overall fiscal position, which is still unhealthy, ideally it will be contributing to the long-term investment needs of the country,” he said.

When asked if he meant the government should focus on smaller infrastructure projects with quicker delivery times than big ticket projects like HS2, Hammond said he thought there was a role for big strategic projects but they were “unlikely ever to be able to contribute to fiscal stimulus because of the timelines involved”.

“Often it is modest rapidly deliverable investments that can have the most immediate impact, particularly on the road network, but also in some places on the rail network,” he said.

Hammond was also questioned on other areas of policy, including the use of private finance initiatives and housing.

He told the committee: “We need to increase housing supply and the government is committed to increasing house building.”